If you owe more than your home is worth, then saving roughly 6% of realtor commissions through a for sale by owner transaction could make or break your bank account.
Realtors hate the idea of anyone trying to sell their house by owner. Realtor backed organizations spend lots of money on ad campaigns that will have you believe selling your house yourself is foolish and downright dangerous. They'll tell horror stories of both buyer and sellers in misconstrued FSBO transactions who've lost tens of thousand of dollars.
These realtors do have a point - it's hard to sell or buy a home without knowing the real-estate law. However, realtors don't know the real-estate law either - nearly every brokered closing has a real-estate attorney present, which again the clients must pay for. Attorney fees are a fraction of realtor commissions on a house worth hundreds of thousands. The bottom line is realtors know how to sell and that selling is skill that many can easily learn. Ergo, if you can manage to sell your house yourself you can save yourself a lot of money. Selling your house yourself is very easy compared to years past. The best realtors used to make it a point to acquaint themselves with networks of qualified buyers, now they reach those buyers through the web most of the time.
Selling your home sans realtor is about listing your home through every online portal you can possibly think of in order to reach potential buyers. Have open houses often and work on your people skills, or if a family member or spouse has a better natural sales ability than yourself then let them do the majority of the hosting. Assure buyers the transaction is legitimate and that you're working with a qualified real-estate attorney. You can even get your lawyer to write you a letter stating their involvement in the process so the transaction goes smoothly.
Realtors will also argue that they will be able to secure a higher price for your home through their selling strategies. However, banks know fair market value of all homes they may mortgage, and they will not approve a buyer's loan unless the price matches the fair market appraised value. So there is really no way even your biggest rock-star realtor is going to get you a lot more for your property. This is especially true in the current economy, where buyers are demanding the lowest price possible and scouring the many available homes for sale for the best bargains.
Then there is of course the argument that realtors can get your home sold faster, an important consideration for those teetering on foreclosure. However, again there is a lot of evidence to suggest that the speed with which homes are sold are greatly determined by pricepoint.
If you're still iffy about FSBO, then consider that realtor commissions on a $300,000 house of 6% equals to roughly $18,000. If you lowered your price by $18,000 tomorrow, even without the reassurance of a realtor, you would catch the attention of many more of today's deal driven buyers.
Jessica Drew is a freelance writer and editor who blogs about a variety of topics including homes, personal finance, investing and debt management.